Full disclosure and prior consideration bar reassessment where reopening rests only on an impermissible change of opinion.

Reassessment under Sections 147 and 148 was held unsustainable where the assessee had disclosed the relevant facts in the return, balance sheet, and profit and loss account, and the original assessment under Section 143(3) had already considered the issue of interest-free loans to related concerns. The assessing officer had earlier formed a view on commercial expediency and the absence of any basis for disallowance under Section 36(1)(iii). In these circumstances, reopening without any failure of full and true disclosure amounted to an impermissible change of opinion, so the reassessment notice and speaking order could not be sustained.

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Issues: Whether reassessment under Sections 147 and 148 of the Income-tax Act, 1961 was valid when the assessee had disclosed the relevant facts in the return, balance sheet, and profit and loss account, and the assessing officer had earlier formed an opinion on the issue of interest-free loans to related concerns.

Analysis: The return and accompanying financial statements placed the material facts before the assessing officer during the original assessment under Section 143(3). The record also showed that the assessing officer had, in response to audit objection, taken a view on the commercial expediency of the interest-free loans and the absence of any basis for disallowance under Section 36(1)(iii). In these circumstances, reopening could not be sustained in the absence of a failure by the assessee to fully and truly disclose all material facts necessary for assessment. The reassessment notice and the speaking order were therefore not supported by the statutory requirements for invoking the reassessment machinery.

Conclusion: The reassessment proceedings were invalid and liable to be quashed, in favour of the assessee.

Ratio Decidendi: Reassessment under Section 147 cannot be sustained where the assessee has made full and true disclosure of all material facts and the reopening is founded on an issue already considered, as such action amounts to an impermissible change of opinion.

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